LIC Housing Finance Ltd. share price target

9 NIM improvement was driven by decline in cost of fund and increasing share of portfoliomixtowardshigheryieldingloans. 8 Loangrowthslightlymoderated(15%yoy)duetoslowdownindisbursals(10%yoy)and...

LIC Housing Finances (LICHF) 3Q core earnings beat was driven by steady NIM and loan growth. With higher competition, individual loan repayments were at a multi-quarter high. Rising proportion of high-yielding LAP and project finance, along with the decline in CoF, supported steady spread/NIM. While project loan disbursements continued their steady run, the growth in individual loans was led by the LAP segment. Asset quality, too, remained stable.

Valuation: The stock is currently trading at P/BV of 2.2X, P/E of 11.8X FY17E. Strong traction in loan book growth and healthy asset quality are amongst the key positives. With, wholesale rates benign, LICHF will be a key beneficiary. We maintain the target price at INR 574/share implying a P/BV of 2.6X on FY17E. We rate the stock an OUTPERFORMER....

Outlook and valuation:Webelieve LICHF is well poisedto deliver stable business growth, healthierspreads,andstrongassetquality.Declininginterestrateandchangeinliabilitymix towards NCDs will further bring down funding cost. Although the declining interestrate...

LIC Housing Finance (LICHF) posted better than expected results for 2QFY16. Core earnings beat was driven by sharp NIM improvement and loan growth. Spread/NIM was boosted by the companys focus on high-yielding loans (LAP and project finance) and decline in CoF.

Incremental cost of funds was down at 8.9% as compared to 9.4% in 3QFY15, which should aid NIM expansion. However, the competitive intensity in this segment remains high with large banks vScore: vScore (Value Score) is our proprietary company rating system f and housing finance companies reducing home loan rates by 2025 bps. LICHF has not yet reduced its benchmark lending rate; we expect the company to follow suit. Hence, benefit to NIMs will be limited even as we expect fall in cost of funds Healthy loan growth: Loan growth for the quarter came in at 19%...

With strong developer sanctions of Rs 4bn in the current qtr, management hinted at a rise in disbursements in FY16

LICHF's Q1FY16 PAT at Rs 3.8bn was above our estimate of Rs 3.7bn. Net interest BUY(Maintain) incomeincreased30%yoytoRs6.6bn,whileoperatingprofitgrew25%toRs6.23bn. CMPRS465 NetprovisionwasRs440mncomparedtoRs90mnlastyear,asQ1FY15hadareversal TARGETRS570(+23%)...

Background: LIC Housing Finance (LICHF) provides housing loans to individuals and corporate bodies. The company is also engaged in the home equity space. The company is a distant second player among housing finance companies in India. LIC Housing has an established network of direct selling agents and home loan agents. Through its subsidiary, LIC Housing operates homes for senior citizens. Loans to individuals form ~97% of the loan book with the...